X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

CAMBRIDGE, MA-Equity Office Properties’ troubles with its blockbuster lease with Microsoft Corp. at One Memorial Dr., are far from over, according to sources familiar with the negotiations. As GlobeSt.com reported last week, the process of freeing up 180,000 sf to accommodate Microsoft has fomented charges that certain tenant rights were not addressed by the subsidiary of the Blackstone Group of New York City.

The initial GlobeSt.com article indicated that tenant PA Consulting Group has an option for the top three floors of the 17-story tower, a clause that EOP allegedly neglected to address prior to signing Microsoft. The landlord is rumored to be working on a resolution that would include free rent and concessions approaching $10 million, if PA agrees to relocate to another EOP building. But sources tell GlobeSt.com that InterSystems Corp., a tenant of One Memorial Dr. since the prominent office tower opened in 1987, is also threatening legal action.

Not only does InterSystems supposedly hold the second option behind PA for floors 15 through 17, but sources familiar with the negotiations explain that the firm had first-refusal rights on most of the other space leased to Microsoft, which inked a 10-year pact at rates said to exceed $70 per sf. One industry professional, also familiar with the negotiations, maintains that EOP considered neither the feelings nor legal rights of tenants who stood in the way of assembling the space needed for Microsoft.

“It was just ‘slash-and-burn, let’s get it done,’” says the source, who adds that EOP had been advised in advance that there might be encumbrances on the space. Blackstone Group spokeswoman Heather Lucania declined comment on the latest information when contacted by GlobeSt.com. Microsoft also declined to comment, and InterSystems Corp. spokesman Paul Grabscheid says his firm “is not prepared to say anything on the matter at this time.” Grabscheid did indicate his firm is focused on remaining at One Memorial Dr. “We have been here for a long time, and we would like to continue to be here,” he says. Calls to PA Consulting were not returned by press deadline.

One participant in the ongoing process also maintains that EOP has been in discussions with other tenants to see if they might relocate to make room for either Microsoft or InterSystems, with free rent and generous tenant improvement allowances among the possible carrots. Worst-case scenario, if Microsoft wanted out of the lease, the costs would exceed $100 million, according to some familiar with the financials.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.